The Secret To Chicago Class-A Multifamily Success: Out-Of-State Couples
Class-A rental buildings in Chicago are drawing a large percentage of their residents from out of state. That was just one of the findings of brokerage firm Luxury Living Chicago Realty, which analyzed data on nearly 1,000 renters from the portfolio of 18 Class-A rental properties where it provides leasing services.
“We are frequently asked about who is renting these luxury units and how they can afford them,” CEO and founder Aaron Galvin said.
The answer to that question is simple.
“People moving to Chicago for high-paying jobs in the urban core are driving this absorption," he said.
The data set included demographic information from 936 Class-A renters. The analysis showed they had an average income of $108,214, and the top industries of employment include financial services, healthcare, management consulting, technology and marketing and advertising. Of the 936, 30.4% were moving into Chicago from one of 36 states, including California, New York and Texas, and this group’s average income was $132,372, or 22% higher than the portfolio at large.
Many providers in the local multifamily market have thought graduates of the Big 10 and other Midwestern schools provided Chicago with many of its renters.
While that is true, this data also shows talent from other large metros such as Los Angeles, San Francisco and New York City are relocating to Chicago.
“In comparison, rents are still attainable here compared to the coasts and Chicago has nearly everything you can get in those other major cities,” Galvin said.
Couples occupy 61.1% of these apartments, compared to singles at 26.3% and roommates at 12.6%.
“Couples are driving the rents in Class-A apartment buildings as their combined income can afford the largest units with the best views,” LLCR Leasing Strategy Manager Mark Ziemke said.
The robust demand from couples means it is essential for developers to build a healthy mix of unit types, he added. Couple-friendly one-bedroom units featuring walk-in closets and double sinks in the bathroom are vital to attracting the large base of renting couples.
“Combined incomes will allow for higher rent prices and increases upon renewals,” Galvin said. “Couples are also more likely to remain in their unit versus an individual renter.”